Tackling the Big Issues in 2022? Yeah Right!

All’s right with the world according to the latest release from  Labours spin machine 

We’re committed to making New Zealand the best place in the world to be a child. The work we’ve done so far to boost families’ incomes and lift children out of poverty has resulted in improvements across all nine child poverty indicators, and 2022 will see further changes come into force to help whānau make ends meet and ensure more children can get a great start in life.

The Labour Party’s New Year’s message cries out for a reality check.  How does not having enough money for food square with being the best place in the world to be a child? Food banks through the Christmas period report distributing food parcels on a massive and unprecedented scale. The demand is not magically going to stop in the New Year, and furthermore a wave of back to school costs will just intensify the unsustainable pressure.

As the figure CPAG provides from the official data shows, progress on child poverty under Labour, even before Covid was not the transformative poverty reduction we were promised. The red part of the figure shows the numbers of children in severe poverty have barely budged- there should be zero under this line.

But the official data is always two years out of date. While the latest figures are unavailable we know from the social sector and harrowing media stories that the last two years of lockdowns has been particularly hard on families and children.

In “Tackling the big issues in 2022” we are told, no worries, help is on the horizon. 

In April, for families with children, main benefits will increase by $15 per adult per week. An additional package of improvements to family support will also come into effect, with boosts to Working for Families payments, including the Family tax credit and Best Start, lifting the incomes of nearly 350,000 families by an average of $20 a week.

Let’s analyse that. The $15 extra per adult beneficiary should have been made last year. In the name of saving the state money, the time on inadequate benefits has been prolonged pushing up family debt. The state may have less debt but families have more.

The claim of an increased $20 per family Working for Family payments includes the periodic inflation adjustment that is obligatory under the legislation once cumulative inflation exceeds 5%.  Families have waited 4 long years for the acknowledgement of this slide in their spending power. The real increase is just $5 extra per child in Working for Families payments will make little difference.

The 160,000 children in families in the red zone (below the very lowest 40% after housing costs line) will still be drowning without a lifeline.  These children are denied the full Working for Families package of at least $72.50 a week, saving government around $500m a year.  Their parents are often sick and face soaring rents or live in squalid temporary motel accommodation. Debts to the IRD and MSD are increasing with many fearful of seeking relief from work and income knowing support has to be repaid.  Hunger is widespread. 

Many other children in low-income families where there is paid work and incomes exceed $42,700 gross will find now the state wants them to repay more of their WFF tax credits back with an increase in abatement from 25% to 27% when they earn a little extra.  That change was pushed through the House under urgency and contradicts Labour’s concern about work incentives. The mess of effective marginal tax rates that can exceed 70% over long income ranges has been swept under the carpet.

At the same time many New Zealanders are getting fabulously wealthy in a sustained speculative housing boom. Balance sheets of the top end of town have never looked healthier. The very wealthy live in a parallel universe, most oblivious to what is happening unless the lack of low paid workers to service their lifestyles inconveniences them.

On misery street, years of not having enough income has reduced household assets and increased debt – something that the current framework of child poverty reduction income targets renders invisible. A few dollars more per week will not solve the accumulated problem of diminished family balance sheets, real transformation is needed urgently.

So far the signs are that we can look forward to more spin and self-congratulations from Labours well-oiled machine in 2022, while deep and desperate family poverty entrenches a large underclass that portends ever increasing social unrest and polarisation.

 

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